New York -- Former Adelphia Communications Corp. chairman and founder John Rigas said he was surprised and disappointed to hear that the company he started filed a Chapter 11 reorganization plan that leaves out current equity holders, adding that the timing of the plan’s filing was curious.
"I definitely feel that there should be something for the shareholders -- there’s equity there," he said in a brief interview outside the courtroom here where jury selection is being conducted for the federal fraud trial of himself, his two sons -- former chief financial officer Timothy and former executive vice president of operations Michael -- and former VP and assistant treasurer Michael Mulcahey.
"My sense is that they never should have gone into bankruptcy to begin with -- there were enough assets there," he added. "That’s a disappointment."
John Rigas also questioned the timing of the filing.
"What they are doing is deliberate -- the timing and what is going on with us," John Rigas said. "Timing has a lot to do with it on their part. It’s pretty obvious."
Timothy Rigas, also charged with several counts of fraud in the federal indictment, declined to comment.
According to its reorganization plan, Adelphia will issue new stock to pay off bondholders and bank lenders, and it has negotiated an $8.8 billion exit facility from four different banks. Current shareholders will only get interests in a litigation trust.
Adelphia chairman and CEO William Schleyer said during a conference call with analysts Wednesday morning that the plan values Adelphia at about $17 billion.
Adelphia’s official committee of equity securities holders -- which, in early February, called for a sale of the company -- came out against Adelphia’s reorganization plan.
In a prepared statement, the committee said the reorganization plan "demonstrates that Adelphia’s management and board of directors continues to grossly undervalue the enterprise value of the company and have failed to fulfill their fiduciary obligations to maximize benefits for all constituencies."
Although John Rigas said he was unaware of the filing of the reorganization plan, he added that he was aware of Adelphia’s equity committee’s opposition to any plan that locked out current shareholders.
"We have to wait and see what our alternatives are," he said.
The Rigas family at one time controlled 20% of outstanding shares and 60% of the voting power of Adelphia. However, once Rigas and his sons resigned from the company in May 2002 amid allegations of wrongdoing, that stock was placed in a trust.
As part of the reorganization plan, Adelphia specifically stated that no payments will be made to claims and equity interests of the Rigas family.